Recent Opinions

Markets. He is a picker of asset classes and countries. The US election was viewed by markets as the outcome being very binary. Then look what happened. The markets did not tank. Both candidates were united on fiscal expansion. Both platforms were built on massive spending. He would challenge the view that people should overweight US equities now that Trump has gotten in. That stock market is one of the most expensive in the world. There are better opportunities elsewhere. New emerging market crisis have not materialized. Emerging markets have already had a big slow down. He is bullish on emerging markets.

He has been rotating out of US bonds. If you are rebalancing away from income you want to look globally. The options are slim for retirees. Look at emerging market bonds. He would not rotate out of the asset class. Emerging market debt space is very attractive. LEMB-N is an attractive ETF.

Market. Everything is going up. At this stage, the rally is getting pretty mature. December is typically a good month. The Santa Claus rally probably came early this year. It is pushing some of the sectors, like financials and cyclicals, quite a bit. If the scenario unfolds as the optimists assume, then he thinks the rotation would be justified, but there is a lot of work to be done yet. Expects there will be a correction early in the new year. The 1st quarter might be a different story, partly as the market is a little stretched. Also, in last 2 years, the 1st quarter there has been some seasonal weakness in the US economy, which would be a good place for a correction.

Would you play the US market with the loonie expected to drop? Expects the Cdn$ to stay relatively weak at $.70-$.75 over the next 12 months, but to have something weaker than that, there would have to be some drastic action. He wouldn’t invest in the US just because of that. The US will give you a broader investment choice and perhaps higher growth.

They’ve done very well over the last 10 years, and the question is, where do they go from here. Do they go into new areas that they haven’t been into? He thinks they’ve been trying, but so far haven’t found the next leg for their growth. Has a good balance sheet and continues to buy back stocks and increase dividends. He wouldn’t expect big things, but they are probably going to do well until they find the next leg of growth.

At this stage, this would be in a holding pattern, because they do have a contract coming up with Air Canada in 2020, and negotiations are underway to renew it. It is yet to be seen whether or not they can apply their model beyond what it traditionally has been. Great dividend.

Thinks the dividend is sustainable. Operating in the oil/gas industry, clearly has some cyclical influences, but they are a service provider rather than a producer. With the gathering systems of pipelines and plants, a lot of the fees are fixed and well protected for the dividend. Growth will depend on what is happening in natural gas prices, and partly to the oil price. At this stage, we are clearly coming off the bottom, so he can see upside from here. Dividend yield of 6.37%.

China is looking good for now and is under owned and under loved. He does not see a crash in China. The market on the mainland had come down so much and is so cheap now. You don’t want to be overweight Chinese industrials, but most funds concentrate in financials.

(Top Pick Sep 20/16, Up 2.88%) The main land Chinese Market. The macro story continues to excite him. He thinks China is doing what they said they would do. They are rebalancing away from exports. He loves the Chinese stock market.

Retail is not an easy place to make money, this is one of the few. Went public earlier this year and have done reasonably well. They are in the retail and fashion business, and have done very well coming out of a private company basis, to manage the fashion risks. The footprint is still rather small and there is room to expand both in the US and Canada. He sees a lot more potential, but this is not a cheap stock. However, the growth more than justifies that.

At this stage, this is something you want to be cautious of. There have been some interesting developments on an insider trading case. The takeover doesn’t seem all that bulletproof as far as financing goes. Also, there could be some regulatory issues. He would be cautious here and not get involved.

Part of the fall off is due to sector rotation. People have been hiding out in this for a long time because of the dividends and low volatility. If your goal is to get good dividends and to preserve capital, you can do very well with this.

Oil prices have had quite a bit of drama over the last 24 months, and lately OPEC has pulled a surprise to the good, which has propped the price up. He thinks OPEC can largely stick to the deal and have the support of Russia. However, there is a cap to the upside on oil getting too high. At over a $60-$65 level, the US drillers will rush back in. This company was doing “just okay” in the $55 range. They are a big player in the US. If you believe oil prices will be in the mid-$50, this one will do just fine.

Financials in the US have done very well recently because of the belief of higher interest rates and deregulation. This is a bit higher on the risk level, but if you believe in the long-term future, it is a more leveraged name to play. In the 1st quarter of 2017, you might see a better buying opportunity.

The biggest reason for the decline is because of the rotation from consumer staples into other areas. It has been executing very well. Trading at reasonably high multiples, so if there is any sort of rotation or poor performance, the stock price will be under pressure. Given their track record, he thinks they will get back on track. If you have a horizon more than 6 months, you could do very well with this.

For companies like this, it is all about leverage to the upside. Clearly the cycle has turned. Gas companies are spending more money on fracing, so they will make more money. The issue is, how much more, and is the capacity still in surplus or not. If oil prices get to $60 plus, there is probably more upside for the fracers.

There are always take over rumours on this. It is the biggest independent fund company out there. He sees that as being less likely these days as most Canadian banks have their fund presence already. This is one of the more efficient operators, concerning expenses and paying good dividends, so it is a good place to be. However, they are facing challenges with regulations on fees.

Feels the dividend is safe, because they have never had a payout ratio that was getting anywhere close to their cash flow level. The company is ready, poised and able to expand, based on internal capital spending and acquisitions. A good place to be. Dividend yield of 4.17%.

Japan is very interesting to him right now. People don’t understand what is going on in corporate Japan. After decades, Japanese companies are very adaptable. More of their production occurs in countries they sell in. 60% of Japanese corporations’ production occurs off shore. This time he thinks the macro dynamics line up for Japanese investment. EWJ-N is another way to play Japan and it is good as well.

The acquisition of Private Bank Corp. in Chicago was postponed for 3 years. This is a strategically important deal for them, and they will likely raise the offer to get it done. The issue with this bank is the overreliance on the domestic residential mortgage market, which could be a problem down the road.

Very good operators and there is still a lot of room to grow their footprint in Canada. They’ve gone from $1 to $1-$4 now, in order to provide a higher price point and better quality goods. If they continue to execute, they are going to be just fine for the next couple of years.

(A Top Pick Nov 10/15. Down 19.94%.) Likes this for its revolutionary technology, designing, installation and manufacturing in modular construction. That hasn’t changed at all. He thinks they are going through a bit of a bump with some of the exposure they have to the oil patch where some big contracts get delayed and cancelled. Meanwhile the rest of the business continues to grow very well and thinks they are poised to recover from here. He still likes this.

(Top Pick Sep 20/16, Down 6.55%)There was an announcement with regard to demonetization. About 80% of daily transactions are in Cash in India and they wanted to get rid of that because of tax dodging. It is part of structural reform. We have seen an initial selloff, but it will be like a coiled spring. He sees a more sustainable rally and likes India long term. Nothing has changed structurally in terms of the Indian economy.

Makes all kinds of different tapes for packaging, but also has leverage to e-commerce with the growth in shipping. Has a lot of business in the US, and have been building new plants to lower costs and improve efficiencies. Their transition has not been smooth, having been hit by a flood and just coming out of it. When they get the plant running well, they are going to have a cost advantage and a lot more capacity. Dividend yield of 3.06%. (Analysts’ price target is $27.25.)

Laurentian Bank (LB-T) or National Bank (NA-T)? Both are Québec based banks, and tend to trade at a discount historically to the sector. National is larger and tend to have more of a higher risk asset mix in terms of lending and international ventures, but also has higher growth. Even though it is working very hard outside of Québec, it is primarily a Québec retail bank. The rationale for buying this bank is more on the dividend, and the hope for more improved efficiency.

This has gone from $90 down to the high $60s in the last few months, partly because of a slowdown in satellite markets, partly because of funding and partly because of overcapacity. They’ve had a huge initiative in trying to get more business from the US government, which has been taking longer than everybody thought. It may take a while to work this out. The next 6-12 months would be a good time to buy the stock.

This has enjoyed a huge rally post the US election, with interest rates showing a steepening yield curve. A good company that, given the right environment can perform well. It will probably take a breather given the run they’ve had. If we get stronger growth, more inflation and higher interest rates, there is a lot more to go. If not, it might be a little ahead of itself.

Laurentian Bank (LB-T) or National Bank (NA-T)? Both are Québec based banks, and tend to trade at a discount historically to the sector. This one is the larger bank, and tends to have more of a higher risk asset mix in terms of lending and international ventures, but also has higher growth. The hope in the shorter term is more of a cyclical leverage, especially to the oil patch, and some of the International investments.

Has done very well since the merger with Marco Polo, and also with getting the cost structure in line, just in time for the takeoff in North American bus orders. The stock has come a long way, so it will probably take a bit of a digestion process. If they can execute what they think they can, then he thinks there is further upside.

This has had some ups and downs, but right now are somewhere around the bottom. There are some signs that things are improving, but there is a lot of overcapacity in the industry, and will take a while to work off. Longer-term, he believes they will come out of it. The next 12-18 months is difficult to see.

He owns it primarily for its dividend paying capabilities. The underlying business, which is primarily insurance, has been under some pressure. If interest rates go up, insurance companies will benefit. The fund business is going to do okay as they have a good business in Canada. He expects the dividend will grow. A good one to own, especially for income investors. 4.4% dividend yield.

It is a good holding if you want to track that index. Since 2008 we are still in a post-financial crisis period and typically they are very inventive in their technology. Globally this is a good area to overweight. Technology is a theme that is good to overweight.

If you look at how corporations are transforming themselves, they want to hire robotics instead of labour. He is not sure Trump’s jobs are ever coming back. Corporations will choose automated routes rather than labour. He would play this theme in the future.

He is bullish on India. You should look at demonetization as getting rid of the black market. They are going to really get the economy going. If there is short term pain and long term gain then in the next quarter or two you will see India come back. The government of India is very credible.

If you own this for the dividend, it is just fine, as they will continue to grow the dividend. The CapX continues to go down, so they will be able to maintain it. If you own for capital appreciation, you are facing some challenges because of increasing interest rates, and potentially more aggressive competition from Shaw (SJR.B-T). A well-managed company.

He is long this one. He is long the solar industry. Whatever policy is coming out in the world, what we have seen is that alternative energy has continued its march higher. It is a reasonably good entry point, but it will be quite volatile.

(A Top Pick Nov 10/15. Up 6.36%.) Recently had a good quarter. His reason for choosing this is that it is a cheap company, because the main printing business cycle has declined. They have gradually transitioned themselves to flexible packaging and continue to manage the base business very well. He continues to like this.

This continues to trade at single digit multiples. Great cash flow and good dividend. The printing business continues to decline, but they manage to slow it down very well. Meanwhile, they take the cash flow and reinvest it in the higher growth, flexible packaging business, for pharmaceuticals, food, etc. They are making a lot of progress, but it has been uneven, but has started to show in the last couple of quarters. If they can continue to do that, it could be a double from here. Dividend yield of 3.45%. (Analysts’ price target is $21.19.)

This has been one of his long-time favourites, partly because they have significant exposure in US retail banking. This tends to not be spectacular in their quarterly results, but they are very steady, and they have the size to show for it. A good long term holding. Dividend yield of 3.4%.

This has done very well recently, primarily on the strength of coking coal, which is based on manufacturing steel, and to a lesser extent copper and zinc. If infrastructure comes into play, it will be positive for all base metal commodities. The issue in the short term is whether the recent run-up has gone too far. What this rally does is to improve their balance sheet. If you want to stay in the resource sector, this is a good place to be.

He was overweight with healthcare for years but it has been damaged because the biotech sector is represented there. It rebounded since Hillary did not win. This is a good one to have longer term if you are committed to the trend of aging populations. It is a good holding.

He has been overweight the financial sector through this ETF. You don’t want to be a contrarian here. Trump is engineering animal spirits. Capital spending will start to happen and you want to be in banks during this period. He likes it and is long.

Stocks outside North America such as UK, Japan and so on. It is good filler in your portfolio because everyone is too much in North America. He is not crazy about the hedge on it. The Canadian dollar has more headwinds than tailwinds.

It is a good ETF to play the US banks. There are a few others. If you look at the banking sector in the US it has been a good place to get into now. Post-financial periods take a long time to work through the financial system. Canadian banks are an uninteresting place to invest. All the macro tail winds are now turning to head winds for the banks. He would avoid Canadian Banks.

During the downturn in the financial crisis, they cut back on spending, and the sales growth slowed down. Now they have started spending again, sales growth has started to pick up. They are taking market share away from Sears, the Bay, etc. They are also adding ancillary products of pillowcases, etc., which actually have higher margins than the mattresses themselves. There is a lot of upside remaining in this. Dividend yield of 2.14%. (Analysts’ price target is $34.50.)

Market. With Trump getting in, we move from a regime of income distribution to growth and going into a period of time of deregulation and strong fiscal policy; moving from an area where everything was bad under Obama, and are now good. He is very, very constructive and thinks we are in the early stages of a new regime. Big money hasn’t positioned for this trade yet. Because we are in a regime change, and going into value stocks, and there is not a large representation of them in the S&P 500, this is going to be a period of time where stock pickers should outperform. You should look for managers that have high active share and are willing to go to areas where there is not a lot of large representation within the S&P 500. Value stocks will outperform growth stocks. Value is determined by “Price to book”. The high ones are called “growth stocks”, and the low ones are called “value stocks”. He likes industrials, commodity companies, and especially financials. This is going to be a global phenomenon.

Precious metals? He is long-term and mid-term bullish on the US$, but thinks it is overbought and is a very, very crowded trade. Thinks the purchasing power (fair value) for the Cdn$ is about $0.80. Every bad thing has been thrown at the Cdn$ over the past 6 months, and it has still hung around at $.74-$.75. He has been accumulating gold and silver stocks below $1170. Gold and silver made new lows when Donald Trump got into power, which was hugely bullish. Feels the US$ was overbought, and that there is going to be a rotation out of that. Also, thinks inflation is coming back, and one of the best ways to purchase inflation protection is through gold and silver stocks.

Marijuana? This is going to provide wonderful income for the government, and at the same point in time it is being legalized globally. It is really, really difficult to pick winners and losers. A very interesting industry with rapid growth, but picking a winner is a crapshoot.

Markets. Seasonality would tell you this is the sweet spot (Dec to May) for North American equities. People have been surprised at the intensity of the rally, however. His view has been that we are on the cusp of a regime change where the baton is being passed from the monitory authorities to the federal government. Stimulus will be dialed back and spending and tax cuts will take over. Having a united house means the table is set to enact substantial policy change. They may not get everything through congress, but he expects a significant portion to get through. Financials, US industrials and energy have been themes he is positive on. The bond market has been in a secular bull market for 35 years. He takes a balanced approach, but he thinks the time is right for caution in positioning the bond portion of portfolios. The era of negative interest rates is coming to a close. There is a lot of money in the bond market in search of capital gains and there is a lot of capital in the equity markets that is chasing yield.

Fixed income over the next year. There are policy diversions between Canada and the US. Canada did not change interest rates this morning. Next week the FED is expected to raise the rate a quarter point. There are expected to be a few more rate increases next year. There is uncertainty in the economy that would prevent the Bank of Canada from raising rates. Global capital is mobile and at the longer points on the cuve, he expects rates to rise in the US. Canada is not going to be immune from that gravitational pull. It will pressure returns in Canadian fixed income. Prudence is the order of the day.

Preferred Shares. He does incorporate them into a number of client portfolios. They are a way to counter the oppressive forces of low interest rates. They have merit in a portfolio. It is very difficult to generalize about the asset class. Each security has its own unique features. Make sure you understand what you own. You should emphasize quality. Income is secondary. He favours rate reset shares.

When this was in the low $90, he bought a small position. He is willing to own this until the next phone launch, which is next fall. The problem is, Mr. Cook is not an innovator, and the best of this company’s days are behind it. It can probably get up to $130-$135. He does not plan to hold the stock after 2017.

(Top Pick Oct 31/16, Down 8.36%)It is a consumer staples stock and has been vulnerable to the rotation over the last 5 weeks. But it is a great growth play. There is a great growth runway ahead of them.

(Top Pick Oct 31/16, Down 8.46%)It reached a high water mark 5 weeks ago. Then a lot of things changed post-election. People failed to grasp that they are throwing the baby out with the bathwater. This one is classified as a consumer staples stock, but it is actually a growth stock. There is some indiscriminant rotation out of some names. This stock is represented in a number of low volatility ETFs. The acquisition environment for them is as ripe as ever and it should be clear sailing for them. He added to it a week or two ago. You can buy on weakness.

He has been buying on weakness. It is a great secular growth story in any space. They are the leading convenience and gas station operator on two continents. High 20’s ROE, mid teens multiple. Great acquirers. CST brands is the biggest acquisition in their history. (Analysts’ Target: $78.36)

This company purchases the water infrastructure of cities in the US, upgraded, fixes it, and then basically sells the services back to the city. A very interesting business model, in that Donald Trump is going to want to rebuild the inner cities in the US. He likes the concept, but this is way too expensive for him. The dividend yield is not high enough and it is expensive.

Banks are a very, very interesting area, whether it is in the US or in Europe. It is an under-owned area, and an area that has underperformed for 8 years. There is a tide including the Italian election, Mr. Trump and BREXIT. There is a new dawn happening, and this is one of the areas where you can make money for an extended period of time. This bank is trading below Book. We are in a very, very early phase of a structural Bull market in financials. It is very under owned by large institutional investors globally. Dividend yield of 1.4%.

This is cheap compared to tangible book. Investors should be looking at things that have been left behind and are cheap. Don’t buy the rich ones, buy the cheap ones. This is trading at a tangible book of about .75, and has a long way to go. You can buy this below where it was in the middle of 2015. It is about to make a 52-week high and break out. Dividend yield of 1.1%.(Analysts’ price target is $59.70.)

They have been in the news recently. They have a lot of coal burning legacy plants. Alberta has regulated coal power out of existence by 2030. There is concerned over stranded assets. The government came to terms with them. There is concern about how this company is going to reinvent themselves. Carbon pricing is coming in Canada. There is too much uncertainty.

It has lagged and the regional exposure is the reason for the lag. It is undiversified by geography and by line of business. His concern would be that although the oil commodity complex is picking up, he feels employment has a lagged effect. Loan losses and credit provisions would be a concern for some time.

Doesn’t own any airline stocks. Typically, when airlines start to make enough money, they get into labour issues and have to increase capacity to deal with that. They’ve had a wonderful run and are wonderful trading vehicles, but there’s too much volatility for him.

Media is being disintermediated by Internet. The area is under a high flux. He looks at Disney as a content manufacturer, it is interesting, but their ESPN franchise is losing subscribers. Feels it is fully priced. In the long-term, it is probably going to be okay, but it wouldn’t meet his Buy criteria. Dividend yield of 1.5%.

(A Top Pick June 16/16. Up 21.61%.) This lends money to the middle market, companies in the US that cannot get loans from a bank or from Wall Street. These are favourite financing vehicles of private equity. By law, they have to pay out 90% of the income they get from lending money, so they have distributions of somewhere from 9% to 11%.

Feels their best days are behind them. What we want to do with technology right now, is find companies that are implementing technology to increase margins. The period of time when you invest in technology companies is over.

They have done a great job under the new management team that came in in 2011. He is intrigued by the turnaround in the business, but is concerned that they are a number 2 player in a market dominated by MMM-N. It is liable to be crushed. It is also very cyclical and although the environment in the US is good right now, their margins would suffer in a downturn. The risk/reward is just not there for him.

There has recently been a massive rotation out of defensive areas, where you didn’t need to rely on GDP growth. This is a wonderful company. Trades between $100 and $120, and is probably going to trade in this range for a time. Large institutional companies will probably look at this as a source of cash, and looking elsewhere to deploy their capital. Dividend yield of 2.9%.

There is something called “Belt Road Initiative”, where China is basically building out infrastructure for Eurasia, and spending $1 trillion a year. At the same time, they are cutting out capacity in coal and iron ore. They supplemented that with exporting iron ore and coal from North Korea, and the United Nations Security Council told them they couldn’t do that, because North Korea was using the money to fund their nuclear program and not feed the people. Now management teams of iron ore companies globally are saying they are no longer fighting for market share, they are fighting for margins, and are cutting out all high cost iron ore. This company has a wonderful yield. Mr. Trump is adding fuel to the fire by building infrastructure in the US. Very constructive on iron ore, met coal and steel for 2017. Dividend yield of about 5.2%.

The numbers going to fast food restaurants is going down. All the McDonald’s are being automated. By taking people out, their labour costs are going down. It has probably had too much of a run for him and not enough dividend. He wouldn’t invest in this, but wouldn’t discourage people who want to. Dividend yield of 3.1%.

Canada’s largest life insurance company. They are in Canada, the States and Asia. Rates going higher is an advantage to them. It trades at about 1.1 times book value. The 10% return on equity is not priced properly into the stock. (Analysts’ Target: $24.03)

It has been doing quite well recently. They are largest auto parts manufacturer in Canada, but have well balanced exposure to North America, Europe and Asia. It is a play on the continuation of the auto parts cycle. It trades at under 8 times earnings with peers closer to 12. (Analysts’ Target: $64.52)

A “steady Eddie” infrastructure play. It does airports with de-icing and provides the planes with food. It owns oil storage, some wind farms and some utilities. Dividend yield of 6.26%. This is a stock that you don’t have to worry about. (Analysts’ price target is $94.80.)

They had been on a spree of acquisitions in the last couple of years. It pulled back off the recent high. He likes the business model. Infrastructure in the US should benefit them. They meet all the ‘buy America’ regulations that local transit authorities consider when doing their procurement.

Consumer goods is an over owned area. A wonderful company, but most institutional global investors are probably overweight this area. Throughout 2017 this is going to be used as a source of cash to redeploy into other areas of the market.

(Top Pick Oct 31/16, Down 0.37%)Natural gas prices have risen quite formidably. They are the lowest cost producer in the western Canada sedimentary basin and they have put up the highest shareholder returns since 1990.

Has a small position, and feels it is best of breed in the medical space. One thing he is concerned about, and why it is down today, is when Donald Trump tweets about healthcare. The volatility is there, but it is very, very cheap, and the franchise value is very strong and he likes this long-term.

He is avoiding the space. It was a trade for the last cycle. He would avoid this and others in the space. Rates have been so low for so long and these equities have been so high for so long. E-commerce is displacing traditional retailers.

The banks have done well off the summer lows. He thinks they are tremendous shareholder value creators. TD-T is at the higher end of its multiple range, but it is keeping pace with some of its peers in the US. He is seeing a real game changer in their US subsidiaries with a roll back on restrictions. He sees a bright outlook for the banks.

He likes to buy things when there is a lot of fear. 6 months ago everybody liked gold and silver, and now everybody hates it. Gold and silver made new lows, but the stocks didn’t. He thinks there is a cycle low being put in. These companies now are implementing technology, and are becoming much more efficient, so their operating leverage is much higher. Dividend yield of 2.37%. (Analysts’ price target is $23.45.)

Market. Donald Trump is usually better for business. Business has been restrained for 8 years by regulations. There was a major break out in the US$. For the last 3-4 years, Brian has been pounding the table for the US$, saying that we were going to have a Ronald Reagan rally. The US$ Index under Ronald Reagan went from about 80 to 160 against world currencies. Under Donald Trump, he sees it easily going to 160 from their current amount of about 100 over the next 4-7 years. We are only in the first inning of interest rates going up, and if Trump is true to his word, expect a big bear market in fixed income, and a big rally in the US$ and in US assets, including equities.

Gold. Thinks gold is going down to $400 an ounce, because of higher interest rates and a higher US$ and anything that is detrimental to gold. Looking at a time frame of 3 to 5 years, the Congressional Budget Office is forecasting fiscal spending of $5.3 trillion over the next 10 years. That breaks down to the US government growing the economy 2% per year during that time. That is the US government and doesn’t include the private economy.

Energy. Christmas came early with the November 30 announcement that OPEC had struck a deal. He hadn’t seen this happening. There was a tremendous amount of pessimism going into the November 30 meeting. Even the most bullish forecasters were starting to doubt that something would happen. We had a $6 rally in crude prices. Now it comes down to whether or not members will actually stick to these targets. They also have 600,000 barrels from non-OPEC producers, committed to be taken off the market. Half of that is Russia, and Russia has a terrible track record of keeping their word. Even though the deal was not expected, there were still signposts that suggested the market was going to balance itself at some point in 2017. This deal has effectively accelerated the point at which the markets balance, and can start working through these high inventory levels around the world. OPEC is now producing about 34.2 million barrels a day, and that is up substantially in the last couple of months. He thinks that with this impending deal, there was a race to get production up because producers probably knew that at some point, if the deal was going to be arrived at, it would be based on where their production had been most recently. We don’t need oil prices to get back to $80-$90-$100 for North American companies to really make healthy returns. He looked at some of the individual well economics of Canadian producers at $90 Cdn per barrel. They are generating approximately the same rates of return at $60 Cdn. Currently, we are now more of $70 Cdn, so there are a lot of very investable companies in Canada and North America at these price levels.

(A Top Pick Dec 8/15. Down 5.17%.) His model price is $141.30, a 30% upside. Thinks this is just going to mosey about. Expects it will trade back to $94.50. This is going to be a beneficiary of higher valuations and higher stock prices as the US$ goes up.

You are getting the big insurance companies emerging. The market is communicating, through his model price, that it likes the balance sheet. This is the highest valuation it has been in 8 years. Dividend yield of 2%. (Analysts’ price target is $66.24.)

His model price is $76.27, a 26% upside from $60.60. If you can get this at $50, that would be a fantastic buy. If you don’t own the stock, he would wait for $50. The current valuations are still cheap compared to his model price.

A small emerging Montney producer. He made a small flow-through investment in this company. They have a little over 87 sections of land in an area called Elmworth Pipestone. At Encana’s recent investor day, they highlighted the emerging potential of Pipestone. For a multi-billion dollar company to highlight this, this is a company that has material exposure. For a company this size, it is interesting because of Encana’s interest in this play.

All 3 picks have recently done fairly transformative acquisitions. He wants to own companies that have institutional following and access to capital markets and could do smart acquisitions at the bottom of the cycle. A natural gas producer and has a Pouce Coupe asset. His issue historically has been that they have always had too much debt, but they did a $625 million acquisition of a Gordondale asset that is contiguous to their Pouce Coupe asset. The 2 fit together really well. It has the effect of lowering the decline rate, and he thinks has increased the cash flow profile. They also brought down their balance sheet leverage. Has a five-year growth plan in place that is entirely funded by internally generated cash flow. He can see this being in the mid-teens by next year. Dividend yield of 1.04%. (Analysts’ price target is $12.35.)

This has gone through a period of significant adjustment to the current commodity prices. They’ve had to right size the dividend, reduce leverage levels, sell assets, etc., and he thinks they are through the worst of it. This is something that he thinks he should be looking closer at.

He has a very small position. Views this as torque to higher oil prices. He is comfortable with the credit profile, which has been an issue in the past. They ended up securitizing their credit facility against the assets, and pushing down the subordinate note holders. Doesn’t think the company has an issue with debt, but it has struggled in an environment of lower oil prices. Once we get to $55 oil, it becomes profitable again. Once it gets to $60 and beyond, this company looks a lot better than it does now.

In the last 4 years, the Fed has been restraining the banks from even increasing their dividend. If the banks do well, America will do well. This is a long-term secular story. There is a lot of runway in terms of expansion of their earnings if interest rates go up and they can re-lever their balance sheets. Dividend yield of 1.11%. (Analysts’ price target is $59.70.)

Has been a disappointing performer this year. The bright side is, you have an opportunity to buy this at a valuation that is almost at a historical low. They have an enormous depth of inventory. The well results from their US holdings is very encouraging. They are doing some very novel things in terms of water flood. Have cut drilling times from 8 days to 5 days in a year in the Bakken. Sentiment has been poor for them. This would be a buying opportunity for a long-term holder.

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